(File photo) Former President of the Philippines Ferdinand E. Marcos Sr. during a national television interview at Malacanang Palace. He sought to squelch rumors that he is gravely ill and ruled out reimposition of martial law. | Location: San Miguel, Manila, Philippines.

Metro Manila (CNN Philippines) — Economists and analysts have become conservative about the country's economic prospects in the wake of a growth slowdown, soaring consumer prices, depreciating peso and rising interest rates.

These have come about as some Filipinos who have lived during the martial law years and now struggling to make ends meet couldn't help but compare if current conditions approximate events that happened more than 40 years ago.

The political divide between supporters of the late former President Ferdinand Marcos and those against him and his strongman rule remains as wide each time the nation marks events related to the Marcos regime, including the nationwide declaration of martial law on September 21, the People Power Revolution in February, and recently the burial of Marcos at the Libingan ng mga Bayani.

But is the cause for concern valid that recent economic developments are seemingly turning out the way things were four decades ago?

Short-term gains

According to government data, economic growth — measured in terms of gross domestic product (GDP) or the sum of goods and services produced in the country for a given year — hit record-highs after Marcos declared martial law in 1972. In 1973 and 1978, annual GDP reached 8.9 percent and 8.8 percent, respectively. Among the growth drivers were exports of coconut and sugar - commodities that were highly regulated at the time.

Martial law lasted for nine years when it was lifted on Jan. 17, 1981. But the Marcos regime lasted five years more before it was ousted by the People Power Revolution in February 1986.

Prices of widely-used goods dropped sharply after martial law was declared. From 14.4 percent in September 1972, it significantly improved to 4.8 percent in December of the same year.

Infrastructure spending surged as the government embarked on a number of projects such as roads, bridges, hospitals and cultural establishments.

But, these are only short-lived achievements. A wider look at the entire regime tells a more accurate story of an economic downfall.

Long-term woes

Maria Socorro Bautista, a professor at the University of the Philippines Diliman, told CNN Philippines that the economy did not do well at the time.

"The country's average GDP during the 1972-1980 period was at 5.98 percent, while our neighbors in the ASEAN (Association of Southeast Asian Nations) performed better during the same period. These include Thailand (7.15%), Indonesia (7.49%), Malaysia (8.11%) and Singapore (8.76%)," Bautista said.

Government data show that while GDP nearly reached 9 percent in the early Marcos years, the economy suffered a recession towards the end of the administration- it contracted by 7.3 percent for two successive years in 1984 and 1985.

There was an infrastructure boom at the time, but it came at the expense of a high external debt. The government borrowed outside extensively from the mid-1970s to the early 1980s to fund a number of projects. From $4.1 billion in 1975, external debt ballooned to $24.4 billion in 1982.

This came at a time when the United States suffered a recession in 1981. This pushed the U.S. Federal Reserve to raise interest rates, which had an impact on the Philippines' dollar-denominated loans.

By that time, the Philippine economy needed a booster shot, and turned to the International Monetary Fund in 1984 for more financial assistance. It was a bitter pill as the loan had a number of conditions, including the peso's devaluation. The exchange rate in 1984 was ₱16.70 per U.S. dollar. In the following year, the local currency plunged nearly ₱2 to ₱18.61 per U.S. dollar.

Meanwhile, GDP per capita, or economic growth as measured by an average person's income, was on the decline in 1983, and recovered only in nearly two decades, or 2004. By then, the Philippines was at the bottom list in Southeast Asia.

"Considering the fact that we had the highest per capita GDP growth rate in Southeast Asia in the decade 1950-1960, one has to really wonder why we were unable to attain high growth rates and sustain such high rates of growth like our neighbors did," said Bautista.

By the latter part of the Marcos administration, the economy was at a critical stage — imports were expensive because of the depreciated peso, and consumer demand outstripped the supply of goods resulting in higher prices of basic and prime commodities. In September 1984, inflation hit 62.8 percent, from only 4.8 percent 12 years earlier.

Bautista said Marcos's associates who benefited from the economy made things worse. Officials estimated the Marcoses and their cronies obtained illegal wealth of around $10 billion, or around ₱540 billion but the family has since denied this allegation.

The Presidential Commission on Good Government, the agency in charge of going after the Marcos ill-gotten wealth, had so far recovered at least ₱171 billion.

Economic aftershocks still felt 46 years later

Bautista said current conditions still bear the impact of economic events during the Marcos regime. She said the country "has lost an entire decade of development in the 1980s" as it struggled to keep pace with Asian neighbors. Thailand, Japan and Korea, for example, went through an industrialization phase, developed their export sector and attracted investments with good returns.

"We have not become world-class exporters of manufactured goods except for computer chips. We are not an export-led growth economy in the sense of the Asian economies, except labor export. We cannot go back in time to reclaim these missed opportunities," she said.

The Philippine manufacturing sector remains weak to this day, resulting in more purchases from abroad that have widened the trade deficit. From January to July 2018, the trade gap stood at $22.5 billion as imports surged and exports were flat.

Government data show majority of these imports were construction-related goods in the wake the Duterte administration's "Build, Build, Build" infrastructure program.

Will the Philippines fall into another debt trap due to "Build, Build, Build"?

The ambitious ₱8.7-trillion "Build, Build, Build" program aims to ramp up infrastructure development to improve public transportation, encourage businesses and investments, create jobs, and spur overall economic growth.

The infrastructure program comes with a hefty price — billions of dollars in foreign loans from other countries such as China and Japan. However, economic managers assured the public that the Philippines will not fall into another debt trap reminiscent of the martial law era.

Finance Secretary Sonny Dominguez said the numbers show the country is managing its finances and debt position well.

"On the fiscal side, we have very good revenues. We are not suffering from any deficits there. Secondly, we have a very good credit rating. We have relatively low indebtedness. Our total debt is only 42 percent of our total GDP, which at one point is over 70 percent. Twenty three percent of that is foreign debt, so we have a lot of head growth," he said in an economic briefing.

"Furthermore, our debt service is only 13 percent of our total annual budget. We have a lot of headroom in managing the fiscal deficit because if we see the necessity, there are always actions we can take there," he added.

For UP professor Bautista, debt-driven growth is not bad for as long as the funds are invested in productive sectors that will support growth. "Productive investment will generate future streams of income that will not only increase domestic output and income, but also allow the country to service its debt," she said.

"We have a very healthy banking system, which is a result of the excellent job the BSP (Bangko Sentral ng Pilipinas) has been doing through the years. We have very high gross international reserves. People are saying the reserves are going down, but that's why we had them high in the first place, to prepare for situations like what we are experiencing at the moment," Dominguez said.

On the other hand, data show this was not the case during the Marcos regime. Borrowings were invested in projects that produced little or no returns to sustain the economy.

"During the Marcos regime and especially under martial law, there is evidence to show that the productivity of capital was declining rapidly, and that ICOR or the incremental capital-output ratio was highest in the region, meaning investment was inefficient," Bautista explained.

She pointed out the mothballed $2-billion Bataan Nuclear Power Plant completed in 1985. It took 20 years for the government to pay off the debt, reaching $22 billion in 2007. Filipinos are still paying for the plant's maintenance at ₱27 million per year.

Lessons learned from Martial Law

Bautista said there were hard lessons during martial law, and these should prompt policy makers to improve on what was done in the past.

"If we operate in a highly protected economic environment, it sets up the wrong incentive structure and we end up with inefficient industries who cannot specialize and realize scale economies. Specialization is limited by the size of the market," she said.

The martial law era and the Marcos administration in general had its boom-bust cycle. The nation had marked its 46th anniversary of declaration on September 21. The economy weathered political upheavals since then, and its resilience will only be determined by the soundness of policies with the welfare of the greater majority in mind.